Report Underscores Netflix's Brand Loyalty Problem

by , Sep 7, 2012, 2:01 PM
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Despite enjoying impressive usage among its user base, streaming media provider Netflix has a serious brand loyalty problem, according to a new study.

In its “Over the Top TV 2012: A How People Use Media Report”, research firm GfK finds that the average Netflix user between 13 and 54 years of age watches 5.1 TV shows and 3.4 movies per week.

If each TV show is 30 minutes long and each movie is 1.5 hours, that means the average Netflix user spends 8 hours per week using the service, or roughly double the time an average person spends using a video game console (3.5 hours per week, according to MultiMedia Mentor).

Moreover, the study finds that 47 percent of 13- to-54-year-olds have used Netflix, and that 39 percent are monthly users.  

However, it seems these users are not loyal: nearly 4 in 10 Netflix subscribers have a negative view of the brand (37 percent), and 51 percent say they would be willing to switch to another service if it were offered by their pay TV provider, the study says.

It would seem that Netflix is still recovering from last year’s public relations debacle, which resulted from an ill-advised attempt to separate the company’s mail-order DVD service from its streaming media service -- a move that would have cost users of both services more money. After receiving a ton of negative feedback from both users and the media, Netflix decided to drop the idea. Nevertheless, the company saw its stock price plummet and then lose nearly 1 million subscribers in one quarter.

The GfK study will no doubt be welcome news to Netflix’s growing list of competitors, notably Amazon.com’s Amazon Prime service, which recently inked a significant distribution deal with EPIX, a joint TV venture from the prominent Hollywood studios Lionsgate, Paramount and MGM.

As David Tice, SVP of GfK Media says: “Netflix clearly has built a model worth emulating -- but it will have to fight harder to sustain brand loyalty and its position as market leader.”

The GfK study was conducted in June 2012 among 1,051 people ages 13 to 54. 

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